Failure Ideas Vs. Failure Strategies

This blog discusses two articles “Why Good Companies Fail to Thrive in Fast Moving Industries” & “Discovering New and Emerging Markets” excerpted from the “Innovator’s Dilemma”.

Not all the points made in the two articles were quite straightforward or fairly reached to me. However, this blog is more about reflecting on the some of the interesting points raised that are quite relevant to strategy development.

Starting with the quote that the author almost ended up with: “Amid all the uncertainty surrounding disruptive technologies, managers can always count on one anchor: Experts’ forecasts will always be wrong. It is simply impossible to predict with any useful degree of precision how disruptive products will be used or how large their markets will be.” This is quite interesting because the author presents it like a paradox where from one side to enter or penetrate a new market with a disruptive technology and expect success you have at least to have some sort of predictions, awareness and understanding of how this market will behave and respond to your offering. However, at the very same time, if you know all that then by definition what you’re offering is not “disruptive”.

This takes us to the next point about the distinction made between failed ideas Vs. failed management where the author mentioned: “Because failure is intrinsic to the process of finding new markets for disruptive technologies, the inability or unwillingness of individual managers to put their careers at risk acts as a powerful deterrent to the movement of established firms into the value networks created by those technologies.” Which is indeed quite insightful thought describing how the real business goes about formulating strategies. Imagine, a CEO or strategy team who are performing relatively fair, why would they put their careers and reputations at stake and risk a “disruptive” new idea that comes with high reward indeed if it works but also comes with high chance of failure! The author somehow solves this dilemma saying: given that failure is a requisite -so to speak- to innovation and creating new markets, companies don’t have to drain all their resources behind on single risky endeavor. He also gave a living example of “Honda’s idea about how to enter the North American motorcycle market was wrong, but the company didn’t deplete its resources pursuing its big-bike strategy and was able to invest aggressively in the winning strategy after it had emerged”.

The first thought that comes to mind challenging the author’s resolution to the dilemma is a start-up. I keep imagining a founder of a new company that all what he’s got is a “disruptive” idea trying to enter or create a new crazy market. That guy does not enjoy the kind of resources that well-established corporates have to spend on R&D and innovation “failed trials”. That’s why I feel strategy development in these contexts is tightly related to leadership and entrepreneurial personalities. Because it doesn’t only take a sound logical business plan to move forward with an idea. Rather a resilient mind set of individuals committed to make it happen.

Last comment to conclude this blog with is what was initially mentioned regarding why companies fail:” Companies stumble for many reasons, of course, among them bureaucracy, arrogance, tired executive blood, poor planning, short-term investment horizons, inadequate skills and resources, and just plain bad luck.” What I want to say that my key takeaway from this reading is that listening to your customers is not a cookie cutter approach for definite success. Everything has to be contextualized and tailored for each business situation, my offerings as a company should not be flooding faster than demand and vice versa.